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Saturday, June 30, 2007

Navigating A Technology Shift

A recent article on remarks made by Hasso Plattner, former CEO of SAP, makes an interesting reading besides serving as an interesting barometer of the evolution in thinking in the software industry. Speaking at the launch of a school for design at the Hasso Plattner Institute, Hasso Plattner took the opportunity to comment on the changes in the business application software market particularly related to on-demand software. Of note was the fact that Dr. Plattner credited Google with having a significant impact on computing in general saying, 'Google has changed the world, and we all have to learn, and if we don't learn quickly enough and redesign our thinking ... then we might not be as successful as we were in the past."

For good measure, Plattner adds business software is the most hated product currently on the market and says that there's a surfeit of technology, but we have no clue how to develop user-centric products. SAP now recognizes that good design runs deeper than appearance.
This clearly reflects the fundamental shift that’s happening in the minds of the industry leaders and by extension in the software market itself. As I wrote, the pressures of competition & pricing makes companies try out new models – these sometimes force companies to think for the customers as well – no more proof is needed to be convinced about massive changes that are bound to happen in the enterprise landscape. SAP was not an early embracer of SaaS model and for some time allowed other players to take the lead in the market. Hasso talked about the latest SAP on-demand initiative focused on SME segment. He is pretty insightful when he says,” “Software companies cannot dictate what is happening... If we can follow fast enough and get great new ideas and apply them, the market will decide..It is very hard to deviate from where you are successful. You have to maintain the success but you have to simultaneously think about the future.”
The interesting challenge for the CRM software players is that while there is a wave of interest in on-demand software, enterprises are not so sure of completely switching towards embracing the on-demand model – this despite heavy duty push by high flying players like SFDC. Various studies show that the adoption rates of on-premise to on-demand in mature categories continue to be in the ratio of 4 :1 and is not showing signs of a reversal in the near future. Clearly both the models shall co-exist and customer may have a choice of moving between the models to meet growing business requirements. The best approach is to provide more choices so one may not cannibalize the other ( as Plattner seems to indicate) but could help in increasing the installed base. This way SAP gets the protection of not missing a shift in technology delivery models.

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